Student’s Name
Institution Affiliation
 
Milk Bar Business
Milk Bar Business Plan
An apple a day keeps the doctor away. With regard to this wise adage, White Gold Milk Bar Inc. will not only be a business platform, but also a place to unwind after a day’s work. Accordingly, it will be a venue to revitalize people’s diminished energies through consumption of smooth, cool, and nutritious milk products.  Notably, with the changes in the world diet and nutrition, human beings are always gearing towards healthier eating habits. Consequently, drinking of milk and its by-products will be a welcome to the populous of Delaware town, where the business will be based. Evidently, Delaware town and its environs richly provide milk due to their conducive climate for dairy cattle keeping. In effect, White Gold Milk Bar Inc. will not only provide fresh milk but also yogurt, cheese, skimmed milk, and tea. Moreover, this will be complimented with buns, pastries, cakes, and free Wi-Fi for the majority of the business client base who will be university students. Evidently, they form the biggest part of the population in the town and are present almost throughout the year. Nonetheless, we will also be targeting the working individuals due to their preference for healthy drinks instead of junk foods.
Notably, the operations of the milk bar will be done in a 2000 square foot hall. Noteworthy, the place will be leased annually from the county government due to the limited initial capital base. Nevertheless, as the company grows steadily in size, the lease will be renewed after every two to three years. In brief, the start-up funding requirement will be $200,000. Additionally, the finances will be partly provided by the two business owners namely John Jones and Jeff Mikelson. John will provide the initial capital of $90,000 and Jeff $50,000. Correspondingly, the remaining will be obtained through a two-year bank loan of $60,000.
In summary, the company projects to grow sales revenue from $50,000 to $250,000 within two years after the start of business. On the same note, the financial growth is expected to increase slowly but steadily. Furthermore, since Delaware town is a major milk producing area, the business will have an affordable and steady supply of fresh milk. In addition, the business will enjoy economies of scale through large purchases of milk. In turn, this will translate to the realization of larger profits in due time.
Reason for Formation of a Milk LLC Business
Noteworthy, most of the businesses that deal with milk products basically supply milk in its raw form. In light of this, there is a big market demand for other milk by-products such as yogurt. By tapping into this market, we will be among the first to carry out value addition on milk. As a result, we will be able to get many customers and make huge profits. In addition, there is a large supply of milk in Delaware and its environs, which makes this business easy to start and operate.
Secondly, due to milk abundance in the area, we will be able to enjoy economies of scale that come about as a result of purchasing commodities in bulk. Consequently, we will be able to sell the milk at competitive prices. In effect, the business will be able to break-even within a short period and realize substantially bigger profits in the future.
Thirdly, it is much cheaper to do business in Delaware than in large established towns such as California. In brief, this is due to incurring lower premises rent, transport and having a cheaper labor force as compared to those bigger towns.  Notably, this cuts down on the operational costs for starting a business. In turn, this leads to saving on the much needed starting capital investment.
Finally, the formation of the business as a limited liability company will facilitate a smooth and simple entrance into the milk industry. Inasmuch as the formation of a corporation will ensure that the business has large capital to compete with major players in this industry,  this will take a lot of time and is much costly (Mancuso, 2015). Consequently, the start of the business as a limited company will ensure an easy and quick entrance into this industry. Furthermore, once the business becomes popular it can always transition into a corporation by fulfilling the necessary legal requirements.
Advantages and Disadvantages of a Limited Liability Company
Basically, a limited liability company (LLC) is a hybrid type of legal structure that has the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership. In addition, there are few legal requirements needed for its formation. Evidently, there are a number of advantages and disadvantages gained when one starts a LLC. In general, the main ones are as follows:
Advantages

  • Pass through taxes: In general, there is no need to file a corporate tax return. Owners report their share of profit and loss on their individual tax returns. Consequently, the shareholders are able to avoid double taxation (Mancuso, 2015).
  • Limited liability: Notably, owners have limited liability for business debts and obligations. As a result, their personal assets cannot be attached to pay for the business liabilities (Spadaccini, 2007).
  • Enhanced credibility: Partners, suppliers, and lenders may look more favorably on the business once it is formed as a LLC. Basically, the professional approach of financial activities in a LLC creates credibility of the business financial matters among its stakeholders (Spadaccini, 2007).

Disadvantages

  • Limited growth potential: Notably, the inability of a LLC to issue stocks limits its rate of growth. In essence, this limits it from accessing the much-needed capital needed for business expansion (Spradaccini, 2007).
  • Self-employment tax: In brief, since the earnings are transferred into their respective shareholders’ income statements, this may lead to the increase in self-employment tax on them (Mancuso, 2015).
  • Tax recognition on appreciated assets: In general, this occurs when an existing business is converted into an LLC. Consequently, this leads to increase in tax burden on the business shareholders (Mancuso, 2015).

Steps to Follow When Forming a Limited Liability Company
Essentially, starting a business involves completing a series of legal activities, making key financial decisions, and planning. Noteworthy, this ensures for a smooth running of the business and compliance to the laid down regulations ones the business is established.  In light of this, the starting of an LLC requires the use of the following steps.

  1. Getting business training: Importantly, all investors should get training on how to operate and manage their new business. Evidently, they need this knowledge for them to be able to make prudent decisions on how to manage and organize their business activities. Furthermore, the making of critical decisions such as how to get financing and how to manage the business requires critical insight and knowledge of the business operations.
  2. Choosing a business location: In essence, a market research determines the best location for the business. Generally, the location of a business critically determines the potential number of customers who may need the business services every day.
  • Financial assessment: Ostensibly, this step is what determines whether the business may be able to venture into its desired industry. Inasmuch as having savings is important, businesses should assess their ability to access government backed loans, venture capital assistance, and grants.
  1. Determine and fulfill the legal requirements for the business: Notably, the formation of an LLC will require for the fulfillment of the legal procedures needed in its formation. In brief, this includes conducting a name search, identifying the business address and designated operation offices, filing the name and address of each organizer, stating whether the business will be managed by a separate entity, and indicating the individuals who may be liable for the business obligations. In addition, the business should file the operating agreement controls and the article of organization controls (South Dakota Legislature, 2013).
  2. Registration for state and local taxes: In brief, this is the registration for tax identification number, worker’s compensation, and unemployment and disability insurance.
  3. Obtain business licenses and permits: Generally, businesses acquire state and local licenses and permits required for the LLC.
  • Understand employer responsibility: Finally, the business owners should learn the legal steps needed to hire or fire employees.

In conclusion, having a sound business plan will enable us to make good predictions on the possible hindrances that may crop up. Basically, this may be managerial, operational, or financial challenges. In effect, this knowledge will enable us to develop countermeasures and contingencies to ensure the smooth running of the business.
 
References
Mancuso, A. (2015). LLC or Corporation? How to choose the right form for your business. Berkely, CA: Nolo Inc.
South Dakota Legislature. (2013). Chapter 47-34A: Uniform limited liability company act. Retrieved from http://sdlegislature.gov/Statutes/Codified_Laws/DisplayStatute.aspx?Type=Statute&Statute=47-34A
Spadaccini. M. (2007). Business structures: forming a corporation, LLC, partnership, or sole proprietorship. New York, NY: McGraw-Hill Companies Inc.